Executive Summary

Barclays banking group has been in existence for over 300 years, a period in which the company has grown from strength to strength. The bank has been on the forefront in introducing new innovations to the banking sector with the ATM being the most outstanding introduction. The company has however found the going tough in recent years as harsh financial times have been made worse by controversies and scandals. The challenges however do not mean the bank cannot regain its leading position in the market, through development and implementation of a strategic plan, the bank should be contesting for the pole position in the industry. This will involve identification of the challenges and opportunity posed by the environment in which the company operates so as to come up with the most beneficial strategy.

INTRODUCTION

Barclays bank long and eventful history is an indication of the strides that the UK based banking and financial institution has taken. The institution that started as a bank for goldsmiths has grown tremendously just as the markets has developed. . Through its visionary and innovative leaders Barclays has grown to a world known banking institution with operations in more than 50 countries. This is however the result of strategic planning coupled with encouraging economic periods. Of importance to us however  is the strategic plan that the multinational institution has adopted. Strategic planning can be termed as a holistic process that aims at not only improving but also transforming every aspect of a company or institution so as to achieve better results and better cope with its challenges. Barclays strategic plan is to identify its market position in each individual market and identify ways in which to achieve better results either through financial, corporate or policy adjustments.

            BUSINESS PLAN & STRATEGY

Barclays bank mission statement states that the company aspires to be the most reliable and admired financial services organization in the world, recognized by its innovative, customer focused nature that delivers superb products and services to its customers anywhere they may be, ensures excellent careers for our people and contribute positively to the communities in which we live and work. This is to be achieved guided by the values of respect, integrity, stewardship, service and excellence.

The company’s vision on the other hand is guided by five key principles which are at the core of its operations. Winning together which aims at achieving collective and individual success is the first principle. The company also envisages to develop talented colleagues to reach their full potential and to ensure Barclays retains a leading position in the global financial industry through the ‘best people policy.’ Customer and client focus is the other principle which focuses on understanding the customers’ needs and serving them brilliantly. Pioneering and Trust are the last two principles and focus specifically on driving new ideas and acting with the highest integrity to retain the trust of customers, colleagues and stakeholders respectively.

Strategy

Strategic planning is the systematic process of envisioning a desired future, and translating the vision into broadly defined goals or objectives and a sequence of steps of achieving them. A company can formulate and achieve its strategic plan using various strategies. There are five main models of strategic planning which are; vision based strategic planning model, the issue based model, scenario based model, organic strategic model and the alignment model (McNamara, 2006). The vision based strategic model is the most commonly applied as it acts as a guide to all the operations of the company. It involves the establishment of mission and vision, establishing goals that are in line with vision and mission, advancement of strategies and action plans as The Road Map and monitor and evaluate implementation (Ezendu, 2012). Barclays banking group already have this model established and working.

The company however is re-strategizing and has used the issue-based model which is usually termed as more comprehensive and effective (McNamara, 2006). This approach involves the identification of the major challenge facing the company which in our case is non-profitability. This is then followed by designing of programs (strategies) to address the issue/goal which are achieved through brainstorming and manifold thinking techniques (Ezendu, 2012). The company should then update its mission, vision and values, establishing action plans, develop a yearly operating plan and monitor or reviewing the strategic plan document to note the level of progress (McNamara, 2006).

Barclays bank has not been successful throughout its existence and had its own fair share of challenges and scandals. The most recent one was the rate-manipulation scandal whereby some of the bank’s derivatives traders were found to have attempted to rig the libor rate. This resulted with the company being slapped with a £290m fine and the resignation of the Chairman and Chief executive in 2012 (Treanor, 2013). This was followed by poor results on the company’s finances with the bank reporting a net loss of £1 billion down from a £3 billion profit from the previous year (Alden, 2013). This resulted to the bank focusing its attention on cutting down its costs as it key strategy as it planned to restructure. This resulted to cutting down its workforce by over 8 percent in its investment banking division in the American market (Alden, 2013).

This has resulted to the banking group unveiling a new strategic plan dubbed ‘Project Transform’ which is probably the biggest step that the company has ever taken towards meeting the long term profitability and sustainability (Speculations, 2014). But before we analyse the new plan let’s look at just how the banking group has been operating. The group’s business model is built around its customers with an aim of satisfying the customers and clients by offering a rounded value proposition and creating a competitive advantage through the scale and diversity of its businesses. The model which main goal is delivering value is guided by four guidelines which are creating, growing and protecting wealth, providing essential banking services, value to shareholders and value to society. The banking group aims at balancing the four businesses which are personal and corporate, Barclaycard, Africa and investment so as to reduce its volatility exposure.

The new strategy however will seek to not only change but transform the banking group as in the words of the group’s Chief Executive, Anthony Jenkins who said that “This is a bold simplification of Barclays. The company will be focused on international bank, operating in areas where we have capability, scale and competitive advantage. In the future, Barclays will be leaner stronger and much better balanced.” This strategy will see the banking group hold only more than a quarter of its current risk-weighed assets (RWAs) under Barclays Non-Core (Speculations, 2014). The organizational structure is also set to change with the levels being reduced to five from six. The profitability is set to be achieved through cutting down of expenses which will involve cutting down of the number of employees and considerably slashing its fixed-income operations (Speculations, 2014).

BARCLAYS GOALS AND VALUE PROCESS

The main Goal of Barclays banking group is making Barclays the ‘Go-To’ bank, a goal that has been in place for quite a long time. This is a goal that drives the thinking, decisions and actions of the company. It is to be achieved by setting a direction and set of standards for the company. In January the Company reviewed how it operates business and set stewardship as the main purpose of the company. This is to be achieved through a set of values that each employee needs to live and breathe for them to have a true meaning. The first value is respect which aims at respecting and valuing those we work with and the contribution that they make. The company should also uphold integrity by acting fairly, ethically and openly in all that it does. The third value is service whose purpose is to have the clients and customers at the centre of all the company does and through excellence use all the energy, skills and resources to deliver the best, sustainable results. The last value is stewardship whose motto is leaving things better than we found them.

Objectives and Responsibilities

Any institution or organization has to explain its reason for existence and what service it will be of to the society or government for it to be issued with a certificate of operation. Barclays banking group therefore has its own objectives which are to run and develop as a well known business, build a close relationship with their customers and to build for the future and to spread all over the world. These objectives are however only a guideline to the responsibility of the company. The company houses social, business and environmental responsibilities which it ought to fulfil.

Social Objectives and Responsibilities

Barclays has always been on the lead in matters concerning the well being of the society which forms its customer base. Its involvement in the society has been outstanding with the most popular being the sponsorship of English football through its multi-million pound deal. The company has also been involved in a lot of other activities that are however not as popular. The company has a regional and global program which aims at developing the young people’s enterprise, employability and financial skills for them to achieve their full potential. The program has so far reached over 2.43 million young people since its inception in 2013.

The company’s support to the community is delivered through a combination of community and employee programs which help in reaching the people. The community program involves working with respected and relevant NGOs through investments in form of financial resources, time and skills. The employee program on the other hand encourages the employees to use their professional skills and expertise to help the communities that they live in. The company actually has an annual volunteering campaign that takes place in October each year which encourages employees to give time and skills and not money to support the communities they work and live in.

            Economic Objectives and Responsibilities

The company supports economic growth and job creation by delivering the right products and services that help individuals, businesses and society make substantial progress. Through the use of the vast knowledge that the company has acquired throughout its 300 years existence, the company is able to prioritize and channel its resources and networks to address social challenges and contribute to a more inclusive prosperity. The company uses several approaches to contribute to the well being of the economy through helping institutions, increasing access to finance, lending, social innovation, supporting businesses and youth employability.

Environmental Objective and Responsibilities

Barclays group in their environmental management policy statement recognizes the social and economic consequences of a changing climate and the fact that they will continuously impact on the customers and clients. The company also notes of its impact on the environment which is either direct or indirect through the lending and investment activities and through the procurement practices. The company commits itself to the continual improvement of the environmental management systems so as to mitigate the company’s direct environmental impacts, reduce the use of natural resources and prevent pollution.

Barclays have partially achieved this through the commitment to emissions reduction which evidenced by the fact that the UK carbon footprint is made up from around 80 percent general energy use and 20 percent company travel. The company also offsets its emissions with investment in clean technology and global community energy projects such as facilitating the provision of energy friendly stoves in Uganda.. Other than taking measures within its operations, Barclays has also been involved in efforts to promote awareness of climate change among its clients and consumers through providing products and services designed to help customers reduce their carbon footprints.

Barclays SWOT Analysis

SWOT analysis involves a simple scrutiny of the external and internal environment and operations of a company to identify its Strength, Weakness, Opportunities and Threats. This method is mostly favoured because of its simplicity, flexibility, integration and synthesis and collaborative qualities (Ferell and Hartline, 2014 ). The table below provides the SWOT analysis of Barclays

 

Strengths ·         World’s third largest bank in terms of assets ·         Barclays corporate received the Lender of the year Award at the 2011 Health Investor Award ceremony for the third time ·         The brand is unique historically and has a good social image (citizenship) such as sponsorship of the English Premier League ·         The company has the benefit of large economies of scales and spread of risk due to its global presence. ·         Barclays ranked second overall in Risk magazine’s survey ·         Distinct technological innovations such as the introduction of the first credit card ever

Weaknesses ·         Defective and inefficient control systems ·         Frequent fines and penalties due to failure to comply with regulations ·         Controversies such as the funding of the government of Zimbabwe ·         Cases that distorted its name such as the allegation that the company was involved in cash laundering ·         Poor financial performance in recent years.

Opportunities ·         Growth and expansion opportunities in emerging ·         Earning urban youth looking for investment options. ·         Increasing significance of the role that banks are playing in the society ·         Increased focus on customer satisfaction resulting to higher satisfaction levels ·         More potential in the international market which has not been exploited

Threats ·         Varied government legislations in its global markets. ·         The Independent Commission on Banking consideration to split retail and investment banking operations ·         Increased competition and threats in the banking industry from other companies such as J.P. Morgan Chase.

 

            PESTLE Analysis of Barclays

The PESTLE method of analysis is a tool that is used by companies to analyse the environment that they operate in. Barclays, therefore, needs this tool to identify factors that are likely to have significant effect on the industry in general or the company specifically (Allen, 2001). The P stands for Political, E for Economic, S for Social, T for Technological, L for Legal and E for Environment. Its however to note that that this method only provides raw materials for decision making and for it to be effective it must be used with other environmental tools and methods (Allen, 2001).

Barclays has expanded operations substantially and the fact that it has international branches its bound to be aware of the political trends in countries that it has operations in. The instability in countries where it has operations such as Uganda or Zimbabwe is bound to affect its operations and therefore the company has to analyse such political situations and make the right decisions. Economic factors such as the economic depression and uncertain economic periods have greatly affected Barclays and have been the cause of the recent decline in its financial results. The depression actually led to the company resulting to the UK for bailout as a source of final resort.

The social factors have also had an impact on the company’s activities in terms of employees’ relations and the relations with customers and clients. The company for instance aims at developing a working force that reflects the company’s values and objectives. Technology is also a factor of concern for the company as it’s the future of the banking industry and though the company has been on the lead in technological advancements in the banking sector which has given it an edge over its competitors, for this to continue being an advantage the company must continue improving on the existing technology. The company has also had its own challenges in legal matters with the cases involving manipulation of the Libor rates which have had a negative impact on the company both  in the financial and social aspect. The Environmental factors, on the other hand as discussed earlier have been a major advantage for the company since through environmental advancements the company has been able to create a positive public image. 

 

 

            STRATEGIES TO ACHIEVE COMPETITIVE ADVANTAGE

            Ansoff Matrix

This is a matrix which was first published in the Harvard Business review in 1957 and provides a simple and quick way of thinking about growth. The matrix identifies four main options for a company considering growth; using an existing market for an existing product, finding a new market for an existing product, using an existing market for a new product and finding a new market for a new product which is indicated in the figure below.

 

The market penetration matrix which focuses on selling existing products in the existing market involves maintaining or increasing the market share of current products, securing the dominance of growth markets and restructures a mature market by driving out competitors (Patridge and Sinclair-Lunt, 2005). Barclays can therefore use its personnel and corporate competency and focus on the company’s relationship with the external and internal environment so as to increase its sales and image.

A second approach that may be of benefit to the company is the market development which is a growth strategy that seeks to sell existing products in new markets. Barclays can target the middle income earners especially in Africa and Asia, which forms the greatest percentage of the population to expand its customer base. The other approach is the product development approach which focuses on introducing new products in an existing market. The Asian and African market are the fastest growing markets in most industries and Barclays can take advantage of the increased demand for capital by offering flexible lending services. The final strategy which is known as diversification involves marketing of new products in new markets can also be a strategy for Barclays. This may involve Barclays exploring new markets such as the Latin America with specific products which are customized for the specific markets.

 

            Monitoring and Evaluation

This forms the final step in the process of strategic management and involves the evaluation of the progress towards the mission in order to understand which strategy was effective and which was not (Lewis et al, 2007). The methods used can either be the feedforward controls or feedbackward controls. The feed forward control involves prediction of future changes in the external environment or internal operations of a company. The common Equity Tier 1 Ratio or the Leverage Ratio which Barclays estimated to be >11.0% from 9.6% at the end of Q1 and > 4.0% from 3.3% at the end of Q1 respectively are examples of feed forward controls (Speculations, 2014). The feed backward controls on the other hand compare the actual performance with the company’s planned performance (Lewis et al, 2007). Barclays uses Key Performance Indicators (KPIs) to measure the company’s success against each of the four execution priorities. The capital KPIs involve Core Tier 1 ratio and Adjusted gross leverage while the Returns KPIs involve Return on average shareholders’ equity (RoE), Profit before tax (PBT) and Cost income ratio among others and the Citizenship KPIs include Group Employee Opinion Survey (EOS) and Gross new lending to UK households and businesses.

Conclusion

Strategic planning encompasses all sectors of a company and therefore for a plan to be successful the planner should have an in-depth understanding of the operations and activities of an organization. This can only be achieved by beginning with a complete analysis of the initial roadmap or strategy of a company which is the vision and mission statement of a company as it forms the basis and guideline to all other secondary strategies. Barclays being a diverse company in the financial markets has various avenues of exploiting and therefore have the pleasure of applying various analytical models to identify its current position in the market and focus on achieving more competitive advantage and achieving its goals. Through strict implementation, monitoring and evaluation of this competitive strategy, Barclays can achieve its revised vision in the identified time frame.

 

 References

Ezendu, E. (2012, January 19). Strategic Planning Models. Strategic Planning Models. Retrieved June 1, 2014, from http://www.slideshare.net/ezendu/strategic-planning-models-11150946

Ferrell, O. C., & Hartline, M. D. (2005). Marketing strategy (3rd ed.). Mason, Ohio: Thomson/South-Western.

Lewis, P. S., Goodman, S. H., & Fandt, P. M. (2004). Management: challenges for tomorrow’s leaders (Ed. 4. ed.). Mason, Ohio: Thomson/South-Western.

McNamara, C. (n.d.). Basic Overview of Various Strategic Models. Lebcounty. Retrieved June 1, 2014, from http://www.lebcounty.org/LCCJAB/Documents/Basic_Overview_of_Various_Strategic_Planning_Models.pdf

News. (n.d.). Helping people achieve their ambitions. Retrieved June 1, 2014, from http://www.barclays.com/about-barclays.html

Sinclair-Hunt, M., & Partridge, L. (2005). Strategic Management. Cambridge: The University of Cambridge.

Alden, W. (2013, February 12). A New Strategy at Barclays. The New York Times, p. 1. Retrieved June 1, 2014, from http://dealbook.nytimes.com/2013/02/12/a-new-strategy-at-barclays/?_php=true&_type=blogs&_r=0

Speculations, G. (2014, May 15). A Look At Barclays’ Revamped Strategy And Its Impact On The Bank’s Shares. Forbes. Retrieved May 31, 2014, from http://www.forbes.com/sites/greatspeculations/2014/05/15/a-look-at-barclays-revamped-strategy-and-its-impact-on-the-banks-shares/

Treanor, J. (2013, December 3). Banks braced for huge EU fines over Libor rate-rigging scandal. The Guardian, p. 1. Retrieved June 1, 2014, from http://www.theguardian.com/business/2013/dec/03/banks-braced-huge-fines-libor-rate-rigging

 

 
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